Friday, November 02, 2012

The Taxman Cometh

Okay, that was a really bad attempt at a clever blog title. But even still, it is appropriate.

In my post the other day, I alluded to the fact that we must leave Florida by January 21st because our sale tax exemption will run out. I don't know much about sales tax at all really, but in Florida the magic number is 6%. If, however, you buy a boat here and register it elsewhere, you are able to skirt this tax (which in our case is not insignificant so skirt it we will). There is a catch, of course: you must leave Florida in 90 or 180 days*, and you must send PROOF to the Florida Department of Revenue that you left.

When we bought the boat, we were given a choice: we could file for a 90 day extension for $20 bucks, or we could file for a 180 day extension for $425. Luckily, Scott and I decided to err on the side of caution and opted to spring for the 180 day exemption just in case. While our "original" plan had us leaving...well, yesterday...we knew from our Rasmus refit that boat projects always take longer than anticipated and, obviously, we were right. With the 180 day exemption we calculated that we had until the middle of February to leave. Turns out, we were wrong. Turns out, January 21st is, in fact, d-day. Glad we checked!

While that may seem like plenty of time to get things done, our situation is a little unique: Scott is leaving for his next rotation as captain with Island Windjammers on November 28. He returns somewhere around January 12. As such, that doesn't leave us much time at all. In fact, it's less than two months of good, solid work days. We are definitely up against the clock over here.

On the bright side, there is nothing like the threat of having to pay uncle Sam thousands of dollars to light a fire under your ass! We will be avoiding the taxman and making a run for the Bahamas January 21st or sooner. Scott is organizing a merry band of misfits to help him knock some projects off our to-do list so that we can move a little faster and be as close to 'ready' before he leaves for Grenada as we can. Let the countdown to departure begin!

* "Leaving" can constitute going to, say, Georgia for a day and coming back - or crossing over to the Bahamas and coming back. But if we're going to leave...we're just going to go. No more messing around!

The significant other and I are in the EXACT same situation. We bought a yacht in Florida, are currently having her refitted and must leave by Dec15 or pay the dreaded tax. I don't think wer're going to make it, but then again if we don't, the IRS can wait on that until we get back. I doubt they'll have much interest chasing us around the world for a couple of years :)

Hey Brittany! Since you mention registering your boat elsewhere, I wonder if you could help us out with a question - out boat is registered in New York State and not with the Coast Guard. Do you know which one is accepted in the Bahamas? Thanks and good luck with your January 21st departure!Tasha @ turftosurf.com

@NatGeo - Good point. "Avoid" sounds much more legal. I have edited ;)@Ford - glad we're in good company and GOOD LUCK!@ Junaid - yes, but if we leave - we'd rather just leave and be done with it. That is an option, however, that we can use if we must. @Tasha - emailed you :)

Furthermore, our buddy and broker Allen Schiller further expanded...this is copy and pasted from his email: "A little expansion on your recent blog. FL Sales Tax is 6% but in their infinite wisdom and in the interest of keeping boaters spending money in state they capped it at a max of $18,000 meaning you never pay more than on the first $300,000 of a purchase. Yup, you can buy a $50 mil mega yacht and, yup, the max tax you'd pay is on the first $300 k, or $18,000. what a deal!!!!!!!!!!! And the exemption was also designed to allow you an opportunity to continue to boat in the state for an additional 90 or 180 days where you can keep spending $$$. Smart people these tax guys are AND better to say you're avoiding not evading. As one state tax specialist said when helping me sort out a problem…"I'm happy to help someone avoid but not evade" And don't forget you can come back if you stay out for 6 consecutive months!"